Gender pay gap

On this page you will find a summary of the gender pay gap and what contributes to it.

The gender pay gap

A gender pay gap is a calculation of the difference in the average earnings (excluding overtime) of the women and men in any given population. What we generally think of as “the gender pay gap” is the difference in the average hourly earnings of male and female full-time employees in the UK labour market as a whole.

The Office for National Statistics calculates the gender pay gap from data drawn from the Annual Survey of Hours and Earnings, and in April every year it publishes a Bulletin which includes its analyses of the gender pay gap. Provisional estimates are published in the autumn.

You can read the most recent provisional estimates here, or, for a quick read of the headline statistics go to Statistics.

Mean or median?

Both the mean and the median can be used to calculate average earnings, and each produces a different result. The Office for National Statistics prefers to use median hourly earnings, because the median is not affected by extreme values, such as changes in the earnings of small numbers of very high earners.

However, as there are more men than women among the very high earners, and even high-earning women do not earn as much as some high earning men, the mean too is an important measure. The mean also allows Britain to benchmark its gender pay gap against that of other European countries.

Most organisations who measure their own gender pay gaps use both the median and the mean, and when gender pay gap reporting comes into force in April 2017 all organisations employing more than 250 employees will be required to report on their gender pay gaps using both measures.

Why hourly earnings?

Using hourly earnings better accounts for the fact that men work on average more hours than women.

Part-time workers – both men and women – earn less, on average, per hour than their full-time counterparts. However, as a much higher proportion of women work part-time, the gap for all employees, full-time and part-time together, is higher than for full-time employees alone. This does not mean that part-time working causes, or explains away, the gender pay gap. It doesn’t. But it does make teasing out the various contributory factors, including working patterns, more difficult.

Any given population

While it is the headline figure for the full-time gender pay gap that drives public policy on the gap, it’s also possible to calculate differences in average earnings, or pay gaps, for any given population, such as a region or an industrial sector; for a specific occupation; or too look at the gender pay gap in terms of weekly, monthly and annual earnings. Most importantly, it’s also possible to look at gender pay gaps across the earnings’ distribution – the higher up the distribution, the wider the gap.

And although the gender pay gap is usually a measurement made at either the national or workplace level, it can also be measured at the level of the individual employee, and at this level the gender pay gap will vary from one person to another, as people bring different qualifications and experience to their jobs. A gender pay gap between individuals doesn’t necessarily mean that the lower earner is not getting equal pay; there are often legitimate reasons for one person being paid more than another.

The more detailed analyses show that within the overall gender pay gap, progress is uneven: the gap is wider in the private sector than in the public; it is narrower or non-existent for younger women and at the lower end of the earnings’ distribution, but the gap for older women and at the upper end of the earnings’ distribution, where men predominate, shows no sign of closing. And looking more closely at the part-time gap shows that older women in particular experience a huge pay penalty – these are the women who missed out on the educational and career opportunities now open to younger women.

Trailblazing Transparency, a report published by the Government Equalities Office contains some useful graphics on various aspects of the gender pay gap. You can find the report here.

Why does the gender pay gap matter? Increasing UK productivity.

The gender pay gap matters to women. It also matters to the economy; it is an equality issue, but it’s also much more than that. Successive inquiries and reports have shown that tackling the underlying causes of the gender pay gap can increase UK productivity, address skills shortages, and improve the performance of individual organisations. The Gender Pay Gap, a report published by the House of Commons Women and Equality Committee in March 2016 contains a useful chapter linking action to close the gender pay gap to improving UK Productivity.

The Committee concludes:

“Thereisstrong evidence of the economic and productivity benefits of tacklingthe gender pay gap. The best organisations recognise this andare taking steps to offer flexible working and improve jobdesign to attract and retain talent. However, the productivity casefor reducing the gender pay gap has not been madestrongly enough to all employers across the UK. The Government, business, trade bodies, unions and public sector organisations must workto move the discussion about the gender pay gap beyondone of equality, to one of economic necessity. Government mustalso take action to lead by this example, by ensuringtackling the causes of the gender pay gap is apriority for all public services.”

More recently, in September 2016, the McKinsey Global Institute has argued that narrowing the UK gender gap in work has the potential to create an extra £150 billion on top of business-as-usual GDP forecasts in 2025, and could translate into 840,000 additional female employees. The McKinsey report is the most in-depth analysis to date of the productivity arguments.

What factors contribute to the gender pay gap?

The gender pay gap is generally held to have four main contributory factors: occupational segregation, pay discrimination, the fact that women still bear the main responsibility for looking after children, and the undervaluing of women’s work.

For those working full-time, the gender pay gap is down mainly to industry and personal characteristics; for those working part-time, occupational segregation and the undervaluing of women’s work make significant contributions.

Occupational segregation

Occupational segregation means women working almost exclusively with women, and men working with men. In the UK, while women cluster in the ‘5 Cs’ – cleaning, catering, caring, cashiering and clerical work – men occupy a much wider range of jobs. Part-time employees are more likely to work in workplaces with a high concentration of women. Occupational segregation can be both horizontal and vertical.

Horizontal segregation is where a workforce or groups of workers within a workforce are made up mostly of one sex.

Verticalsegregation is where women’s opportunities for moving up into better paid posts are restricted.

Put simply, occupational segregation results in men getting paid more for working alongside men, and women getting paid less for working alongside women. Occupational segregation is sometimes put forward as a phenomenon which makes the gender pay gap inevitable, but the concept of equal pay for work of equal value – whereby different jobs can be deemed to be equally demanding and therefore deserving of equivalent reward – is intended to redress the inequalities arising out of men and women doing different types of work.

Pay discrimination

Discrimination can be both direct – paying a woman less because she is a woman – and indirect – paying a group of workers less because they work part-time, or failing to reward the emotional demands of jobs that involve caring for others. Direct discrimination may be masked by different job titles or different working patterns. Indirect discrimination tends to occur where there are overly complex pay systems and/ or occupational segregation.

Family responsibilities

The majority of mothers are in paid employment. In 2014, 74.1 per cent of mothers were in the labour force. The duration of time out for childbearing and child rearing has shrunk over the past three decades from an average of seven years down to eleven months, but despite this, women continue to experience a pay penalty for motherhood. In contrast, fatherhood confers a pay advantage on men. Women starting their families at an older age, improvements in maternity and parental rights and childcare, and an expansion of flexible working arrangements, mean that more women than ever before work hours comparable to those being worked by men. The expansion of flexible working arrangements also means that more men are able to share the responsibility for looking after children. For all these reasons, the pay penalty for motherhood ought to be decreasing.

The undervaluing of women’s work

Work done by women tends to be less visible and it is still often the case that women, especially those who work part-time, are perceived as expecting to get less money. The undervaluing of women’s work is closely linked to occupational segregation, as it is the jobs primarily associated with female labour that still tend to be undervalued, especially those which involve the use of skills such as caring, which are seen as innate to women.

Closing the gender pay gap

Because the gender pay gap has no one single cause, a number of levers need to be applied if the gap is to be closed. They include:

Breaking down the segregation that confines women to lower-paying occupations and workplaces.

Implementing pay and reward practices which ensure that equal work attracts equal pay.

Improving maternity and parental leave arrangements. This enables women to maintain their earning power and enables sharing of parental responsibilities, thereby lessening the pay penalty for motherhood.

Opening up flexible working to both men and women in senior jobs. This too enables women to maintain their earning power and facilitates the sharing of the day to day responsibility for looking after children between both parents.

Improved maternity and parental rights are more effective when accompanied by opportunities for men as well as women to work flexibly; flexible working arrangements also help to break down occupational segregation, as does the implementation of measures to ensure equal pay for equal work.

Good equal pay practices pick up, not just on any inadvertent pay discrimination, but also on low rates of return from maternity leave, or on flexible working being taken up only by workers in lower paid roles. Tackling the gender pay gap entails tackling all of its causes.

Fathers and the workplace

On the 16th January 2017 the Women and Equalities Committee launched an inquiry into fathers and the workplace.

The relationship between the gender pay gap and equal pay

A figure summarising differences in average earnings can be derived either from official data sources (in which case the figure says something about the positioning of women within the UK labour market), or from an organisation’s own payroll and human resource data (in which case the figure says something both about the positioning of women within that organisation or workplace and about the likelihood of her receiving equal pay).

As differences in average earnings are affected by factors such as women and men being clustered into different types of work, a gender pay gap is a reasonably good indicator of women’s position in comparison to men within the given population.

However, because differences in average earnings cannot show whether women are doing equal work to men, or whether the differences in pay are for some legitimate reason, a gender pay gap based on differences in average earnings is not an indicator of the extent to which women are getting equal pay. So, the national figures do not tell us to what extent women are receiving equal pay for equal work.